Extreme Weather Accounting 2013

It is ironic that organisations like the Heartland Institute combine a religious belief in free markets with a dogmatic denial of climate change science. Yet there exist free market companies who must bet on the science of climate change as an integral part of their business models: the reinsurers. Such companies as Munich Re, Swiss Re and Aon must put their money where their mouths are, and their position on climate change in unequivocal. An article in The New York Times sums up the insurance industry’s position:

Most insurers, including the reinsurance companies that bear much of the ultimate risk in the industry, have little time for the arguments heard in some right-wing circles that climate change isn’t happening, and are quite comfortable with the scientific consensus that burning fossil fuels is the main culprit of global warming.

For this reason, the reinsures provide some of the best data and analysis on climate change trends, including yearly impact assessments. Last week, we got Aon Benfield’s “Annual Global Climate and Catastrophe Report 2013“, which is stuffed full of informative charts. Within the report, you can see a lot of ‘noise’ in terms of year -to-year weather, but also a lot of ‘trend’ in terms of climate. Here are a few charts that jumped out at me.

The first shows the long-term temperature trend since 1880. Nothing new here, but it sets the scene (click for larger image).

Against this background, economic losses due to extreme weather events have been very lumpy. Obviously, you need to ignore earthquake losses in the chart below, but, of the climate-related perils, flooding appears to be showing some tentative trend (click for larger image).

While cyclones, such as Hurricane Sandy, have done much to concentrate the public mind on climate change, they show very little trend to date. This gels with the science, which is still contested on how the frequency and severity of cyclones will evolve as the planet warms (click for larger image).

In the U.S., one impact of climate change appears to be showing a strong signal: wildfires, although you can argue that land-use and fire-prevention practices may also have changed ground cover over the decades (click for larger image).

In contrast, while killer tornadoes have gathered much media attention, it is difficult to pick out a clear trend in activity (click for larger image).

There is a lot more besides these few charts in the report itself. We should also keep in mind that climate has only just dipped its toe out of the Holocene, the period of relatively stable climate that extends roughly 12,000 years from the last ice age and encompasses the development of human civilisation. Within a couple of decades, I expect to see extreme weather events trending more clearly out of normal weather variation. Indeed, current extreme will gradually become future norm.